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Oil price rebounds by more than $1/bbl to 49.89 after falling to as low as 48.11 Monday. While economic recovery may be seen later than previously anticipated, traders find levels below 50 attractive for accumulation. Despite the retreat in the past 2 days, WTI crude oil will probably record the best performing month in March (+10%) since June 2008 as stimulus plans all over the world improved investors' confidence.

During the month, OPEC rejected the plan to cut production further but members agreed to achieve tighter compliance. Compliance in February was 80% and the Algerian Oil Minister Chakib Khelil said it will reach 95% by the time the group meet again in May. While we are confident that most of the members would stick to their quotas when oil price was low, many of them would be tempted to produce more than they were assigned.

Over the weekend, representatives from Kuwait and Qatar said that they were satisfied with $50 oil price. This made us worry that these countries may not be disciplined as before.

Another news about OPEC is that Russia decided not to join the cartel as the Government has difficulties in regulating privately-owned oil companies. However, the nation's energy chief, Igor Sechin said that production may decline by 0.3M bpd if price slides before 40.

Both the World Bank and OECD sharply reduced their 2009 GDP estimates. The World Bank forecast global economy will contract by -1.7% in 2009, down 2.6% from what was projected November 2008 with a -3% drop in OECD countries. For developing countries, the latest growth estimate has been lowered to +2.1%, most than half of +4.4% as projected in November 2008.

OECD also warned that GDP will contract by an average of -4.3% in advanced economies this year and many countries will report double-digit unemployment rates by the end of 2010.

Gold price continues it sideways trading above 910 with uncertainty in near-term outlook. While stock markets decline amid worries about global economies, investors favor the dollar instead of gold as safe haven asset. However, reports show that investment demands stay strong. Apart from surge in gold holdings in SPDR, the gold ETF run by Zurich Kantonal Bank also rose 3.4% to a new high last week. As long as investment demands remain robust, we believe gold's recent correction can hold above 900.